More and more Australians are using the internet to research their housing options, and this is having a major impact on the property market. If you’re in the market for a new home, you’re probably using online portals to help you find listings in your desired area. But have you ever wondered how popular your searches are?
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Buy and Rent Search Index (Buy SI & Rent SI)
The HtAG search index metric aggregates online search data for property listings in Australia. It benchmarks number of searches in a particular suburb against state or area average (adjusted by population size) and assigns an index value that indicates demand in the market.
This is a useful tool for buyers who are trying to get an idea of where the market is heading. It can also help sellers gauge the likely level of interest in their property. The index is designed to have a value between 1 and 10, which is intuitive and easily measured.
A high search index indicates that there is significant interest in a particular market, and this can be a good indicator of growing demand. However, as with other demand and supply metrics it’s also important to consider the index trend.
Demand for Real Estate and Buy Search Index
Because of the dynamic nature of property markets, demand can shift from one market to another or dissipate over time as more established dwellings are built.
The HtAG Buy & Rent SI is designed to not only indicate market demand but also serve as a relative measure that benchmarks a property market relative to neighbouring markets.
For example the number of searches in 2 suburbs can be decreasing along with the wider capital city market. However, searches in 1 suburb may be decreasing at a rate above that of the overall market. The SI chart will reflect that as an decreasing Buy Search Index – blue bars on the chart above.
Demand in the Rental Market: Rent SI
Similar to searches for properties listed to buy, many online portals also collect data on rental listings. The Rent SI metric establishes the online search interest for rental properties in a particular market.
The number of online searches for rental listings in Australia has increased steadily in recent years. On the macro scale this increase is likely to continue as more Australians turn to renting as a housing option.
However as can be seen from the chart above, the Rent Search Index for the CBD suburb of Melbourne as well as many other inner city markets has been on the decline.
Overlaying Buy and Rent SI
The overall trend for Buy and Rent Searches is generally highly correlated. However, when we overlay the Buy and Rent SI for Melbourne, there is less demand in the rental market relative to the housing market.
In general, the rental market is more affordable than the housing market and there is more availability of rental properties than there are houses listed for sale. This is especially true in larger cities like Sydney and Melbourne.
You will notice that a lot of inner city suburbs have lower Rent SI scores relative to Buy SI.
If you’re looking to buy an investment property in Australia, it’s important to be aware of the current demand in the market. Using online Buy and Rent Search Indexes can be a good way to gauge demand in the market. It can help you decide whether to move quickly on a property listing or continue searching for something better suited to your needs.
Buy and Rent SI with an index value of 5 are usually indicative of balanced property markets. Values above 5 highlight markets with higher demand, whereas values below 5 normally indicate subdued demand or markets with lesser sales or rental activity.
As always, it’s important to NOT rely on Buy & Rent Search Indexes in isolation. Always benchmark them against other supply and demand indicators.